Beasley Allen secures $30 million whistleblower settlement in USIS national security case

posted on:
December 18, 2015

author:
Staff

percival whistleblower usis 250x140 Beasley Allen secures $30 million whistleblower settlement in USIS national security caseMONTGOMERY, ALA. (December 18, 2015) – Lawyers from Montgomery based law firm Beasley, Allen, Crow, Methvin, Portis & Miles, P.C. helped to secure an agreement in cooperation with the U.S. Department of Justice (DOJ) to settle allegations that private contractor U.S. Investigations Services, Inc. (USIS), formerly the Federal Government’s largest provider of security background checks, violated the False Claims Act (FCA). Beasley Allen Principals Larry Golston and W. Daniel “Dee” Miles, III, who is head of the firm’s Consumer Fraud section, represented former USIS employee Blake Percival, who filed a whistleblower complaint in 2011 alleging USIS violated the FCA in performing a contract with the Office of Personnel Management (OPM) to perform background investigations of federal employees and those applying for federal service.

USIS acknowledged that it was hired by the U.S. Government to conduct background checks for Edward Snowden, who leaked NSA surveillance documents to the public. USIS also performed the security background check for Aaron Alexis, a technology contractor who shot 12 people to death at the Washington Navy Yard last year. The Snowden and Alexis cases drew the USIS’s work, or lack thereof, into the spotlight and underscored Mr. Percival’s allegations.

The lawsuit filed by Beasley Allen on behalf of Mr. Percival alleged that USIS knowingly conducted flawed investigations of individuals seeking security clearances. Beginning in at least March 2008 and continuing through at least September 2012, USIS management devised and executed a scheme to deliberately circumvent contractually required quality reviews of completed background investigations in order to increase the company’s revenues and profits.

Specifically, Mr. Percival and the United States alleged that USIS engaged in a practice referred to internally as “dumping” or “flushing,” which involved releasing cases to the Office of Personnel Management as complete when in fact investigations on individuals were either not complete or no substantive investigation was performed at all. According to the allegations, approximately 40 percent of all USIS security background checks – at least 665,000 in total – involved dumping/flushing and resulted in individuals receiving security clearances for positions for which they were not properly vetted.

The DOJ joined the lawsuit in 2013. However, in spring last year, USIS’s parent company, Altegrity, filed for bankruptcy, which would make it more difficult for the government to recover what the company owed, and for Mr. Percival to receive a whistleblower reward. Under the whistleblower provisions of the False Claims Act, the whistleblower is entitled to receive up to 30 percent of any money the government recovers. This is both an incentive and a reward for the tremendous sacrifices – both personal and professional – whistleblowers often make by reporting the truth.

Recognizing the importance of the case, Golston and Miles fought to continue the litigation, and the Justice Department agreed to remain a part of the case. Ultimately USIS agreed to forego at least $30 million in payments legitimately owed to the company to settle the government’s allegations.

“Mr. Percival is one of the most important whistleblowers in recent history,” Miles said. “USIS was a key part of this nation’s security procedures, and they were blatantly lying about having completed critical background checks on people who would receive top secret clearances. Mr. Percival put his future, his family’s future, years of hard work on the line in order to tell the truth. And as a result, the nation is safer. The importance of his actions cannot be understated.”

“Being a whistleblower is not something Mr. Percival set out to do but because of the enormous safety and national security concerns involved he felt compelled to do so,” Golston adds. “He should be applauded for his efforts in bringing this national security issue to light. Hopefully, this case will embolden others who are aware of fraud being perpetrated against the Government to come forward and tell their stories and assist the Government.”

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